Hydro Power

Iceland's precipitation combined with extensive highlands, has an enormous energy potential or up to 220 TWh/yr. Of the primary energy use in Iceland, in 2014, 20% was generated from hydropower. The total electricity production was in 2014, 12,9 TWh from hydro.

Much of the precipitation is stored in ice caps and groundwater, and dissipated by evaporation, groundwater flow and glacier flow. In 2014 Iceland had hydroelectric power stations with a total installed capacity of 1.986 MW, generating 72% of the country's electricity production.

A master plan comparing the economic feasibility and the environmental impact of the proposed power development projects is being prepared. It is hoped that this comparison will aid in the selection of the most feasible projects to develop, considering both the economic and environmental impact of such decisions.

If the proposed plan for power plants or for construction of transmission lines is a subject to environmental impact assessment procedures, an environmental impact assessment must have been finalised and an opinion by the Planning Agency of Iceland must have been published.

A licence issued by the National Energy Authority is required to construct and operate an electric power plant. The National Energy Authority is responsible for monitoring as well as to regulate the compliance of companies operating under issued licences.